Impellam gross profit up nearly 30% in H1 2016
Impellam Group has announced its unaudited interim results for the 26 weeks ended 1st July 2016, confirming strong global growth, boosted by its recent acquisitions.
The Group’s H1 revenue totalled £1,085.6m, an increase of 30.5% over H1 2015’s revenue of £831.6.
It recorded £139.0m gross profit for H1 2016, up 27.8% from H1 2015’s gross profit of £108.8m.
Impellam stated its cultural change programme continues to gather pace across the Group and a new role of Group Transformation Officer has been put in place to accelerate the achievement of its vision of becoming "the world's most trusted staffing company''.
It added that its high retention strategy has delivered 96% customer retention.
It confirmed the integration of UK-owned Global Medics and US-based Bartech into the Group has been successful with the Bartech MSP business performing ahead of expectations.
The newly combined North America business has traded strongly and delivered expected synergy savings, the Group announced. It added that, as planned, the increased scale of the group in North America following the Bartech acquisition has been a major factor in the improvement of conversion of gross profit into operating profit, which is now in line with the UK business.
Impellam said managed services revenue satisfied by Group companies increased by 35.0% to £512.4m and significant opportunity remains for increasing the group supply into managed service programmes particularly in North America.
UK Managed Services businesses have performed strongly, the Group announced, with Lorien growing significantly year on year.
The Group intends to increase its focus on Australasia following the acquisition of Global Medics and continue to investment in Comensura, which has won, and is in the process of implementing, 25 new Managed Service contracts, to enable further geographic diversification to the Group and high growth potential.
Cash performance has been strong, said the Group, with cash generated from operations of £22.9 million (2015: £12.8 million outflow) and a reduction in DSO of 4.2 days.
Julia Robertson, chief executive, commented, "I am pleased to report that we continue to make good progress against the 2016 strategic priorities outlined in our 2015 Annual Report. At the end of last year I stated that my major priorities for 2016 were people and cash. That has not changed and I am pleased to report that this focus together with the clarity of purpose around achieving our vision of being "the world's most trusted staffing company'' means that we can be trusted, even in these uncertain times.
“Our focus on Managed Services and Specialist Staffing aimed largely at the contingent workforce, where 90% of our gross profit is derived from temporary or contractor placements, puts us in a strong place both with customers seeking to build better businesses and with candidates who are looking for flexibility, a sense of purpose and employers who value their contribution.
“In North America, which is now under single leadership following the Bartech acquisition, our businesses are performing well, and the increased scale has helped to drive the conversion of gross profit to operating profit in line with UK levels. Our focus on driving synergy savings mean that there will be further full year benefits next year which will deliver further conversion improvement.
“We are pleased with the progress we have made in Australia where we have increased the scale of our healthcare business, Medacs Global Group, and have seen accelerated growth on the back of investment in Comensura which is implementing 25 new Managed Service contracts and has a strong public and private sector pipeline.
“Our cultural change programme is now well underway and over 300 Impellam people have now embarked on a development programme based on effective promise management which is designed both to hasten our progress towards our vision of becoming "the world's most trusted staffing company" and to ensure we operate at optimal levels through increased agility. We have created a “new role of Group Transformation Officer to help drive this cultural change.
"The UK education market has been challenging for a number of months and we are anticipating that this will continue during the remainder of 2016. This has impacted the performance of our teaching businesses in the first half of 2016."
“The English healthcare market has seen major disruption in the first half of 2016 with junior doctors' strikes and the imposition of rate caps. As expected our doctors business was adversely impacted but our nursing business and the other healthcare businesses grew during the first half. The doctors market in England appears to have normalised following the disruption caused by the rate caps and we remain confident that our focus on Managed Services and Specialist Staffing will deliver a strong performance.
“The Group is concentrating on bedding in the 4 acquisitions made over the past two years, tuning into customers and candidates and focussing on cash collection with a view to reducing our net debt so that we are strongly positioned to take advantage of opportunities that might occur later in 2016 and during 2017. We have made good progress so far this year and net debt has reduced by £8.5 million from the year end to £109.7 million which is in line with our expectations.
“The combination of the robustness of our Managed Service offering, geographic spread, concentration on the contingent workforce and the Global Medics and Bartech acquisitions has helped us to deliver an overall 35.9% improvement (£8.8 million) in EBITDA in H1 to £33.3 million."
Like many of our competitors, we have seen a softening in the permanent recruitment market in the UK since Q4 2015. Given the current social, economic and political uncertainties in the UK we do not expect this outlook to change. However, we expect our businesses to continue to perform well in our key markets and we are confident that our differentiated high retention strategy, our portfolio of market focused contingent worker Specialist Staffing businesses complemented by our high performing Managed Services businesses, will deliver results for the full year in line with management expectations.
Managed Services UK, Europe and Australasia
Gross profit increased by 15.2% to £29.6 million (2015: £25.7 million). Operating profit increased to £9.6 million (2015: £8.5 million) with conversion of gross profit to operating profit of 32.4% compared to 33.1% in the same period last year. Lorien, the acquisition we made in 2014, continues to perform well and has grown its Managed Service gross profit by 24.8% and EBITDA by 35.6% year on year, demonstrating its strategic fit within the Impellam Group.
Specialist Staffing UK, Europe and Australasia
Gross profit increased by 9.5% to £72.5 million (2015: £66.2 million). Operating profit was £12.6 million (2015: £14.8 million) with conversion of gross profit to operating profit of 17.4%, compared to 22.4% in the same period last year, primarily due to lower permanent recruitment fees, the removal of travel and subsistence advantages and continued investment in headcount to drive future performance. Our UK Specialist business was complemented by the acquisition of Global Medics in 2015, a healthcare business specialising in locum doctors serving clients across the UK, Ireland and Australasia. We are pleased with the performance of the Global Medics business which is in line with our expectations.
US Managed Services
Gross profit increased by £13.9 million to £22.2 million (2015: £8.3 million) an increase of 155.9% after adjusting for currency movements. Operating profit increased to £5.7 million (2015: £0.6 million). Conversion of gross profit to operating profit improved substantially from 7.2% in 2015 to 25.7% in 2016. The increases were driven by the acquisition in late 2015 of Bartech. On a standalone like-for-like basis, adjusting for constant currency, Bartech Managed Services business has grown its gross profit by 14.5%.
US Specialist Staffing
Gross profit increased by £6.1 million to £14.7 million (2015: £8.6 million), an increase of 61.5% after adjusting for currency movements. Operating profit increased by £4.0 million to £3.5 million (2015: £0.5 million loss). Conversion of gross profit to operating profit improved to 23.8% from (5.8%). The Bartech acquisition was the driver for the growth in this segment.
Darren Mee, Group finance director, will be stepping down as director with immediate effect and will leave Impellam at the end of July 2016 in order to pursue other interests. Mee has been Group finance director since January 2015. In that time, he has been an active member of the Board, has significantly improved the capability of the finance function and has played a key role in the acquisitions made by the Group and the funding available to the Group under its revolving credit facility.
Alison Wilford, Group Financial Controller, joins the Board with immediate effect and will take over as Group Finance Director. Darren will support Alison over the remainder of 2016 in her new role. Wilford is currently a director of Leeward Property Management Limited. She was also previously a director of the following companies during the past five years: